Ust Trade Agreement

This article explores various aspects of international trade.

Types of International Trade:

1. Export Trade:
– Involves selling locally produced goods and services to foreign countries.
– For example, the US exports items such as food, auto parts, cars, and aircraft.
– Major US imports include electrical machinery, pharmaceuticals, minerals, fuels, and medical equipment.

2. Import Trade:
– Involves purchasing goods or services from other nations.
– For example, many countries import crude oil from the Middle East due to the region’s abundant oil fields.
– Similarly, Middle Eastern countries import agricultural products from other nations.

3. Entrepot Trade:
– Includes both import and export activities.
– Goods or services are imported from one country and then exported to another country in need.
– The importing country adds value to the products or services before exporting them to another country.

Trade Finance:

Different types of trade finance include:

1. Overdrafts:
– Offer flexibility and simplicity but may have higher interest rates.

2. Payment-in-Advance:
– Buyer makes full or advance payment before goods or services are delivered.
– Can be risky for the buyer due to non-payment risks.

3. Working Capital Loans:
– Short-term loans used to finance upfront business costs.
– Can be secured or unsecured, with increased risk reflected in the loan cost.

4. Factoring:
– Involves selling short-term receivables for upfront payment.
– Helps free working capital from the balance sheet.

5. Forfaiting:
– Based on receivables and differs from factoring in terms of duration.
– Reduces supplier risk once goods are received by the buyer.

Methods of Payment in Trade Finance:

1. Letters of Credit (LC):
– Issued by banks and ensure payment to the seller upon meeting specified terms.
– Reduces risk for the supplier by replacing the buyer’s guarantee of payment.

2. Cash Advance:
– Buyer issues payment to the seller before goods are shipped.
– Seller benefits from upfront cash but bears risk if goods are faulty.

3. Open Account:
– Payment made by the buyer once goods are received.
– Seller bears trade risks, and this method requires a strong buyer-seller relationship.

4. Documentary Collections:
– Seller requests payment and submits shipping documents to the bank.
– Importer’s bank pays the funds to the remitting bank upon document receipt.

Leave a Comment

About Ready

All the Lorem Ipsum generators on the Internet tend to repeat predefined an chunks as necessary, making this the first true generator on the Internet. All the Lorem Ipsum generators on the Internet tend to repeat predefined Lorem Ipsum as their default model text, and a search for web sites.